The Perfect Storm Hits Used-Car Values: The Foundation of the Auto Industry Is Faltering
The following topics all have their part in fueling the storm to come: trade cycles and their effect on new vehicle sales velocity; increased depen
dency on leasing; credit risk; what is holding up the market; fuel prices and their effect on the market; supply and demand; competitors who are unwilling to sacrifice market share while others manage supply problems; manufacturers that start the problem, and dealers who supercharge it; 2016 leftovers in May of 2017; the importance of the rental car market; expected results versus reality with respect to sales; it’s not just a retail sales problem; and what comes next.
In conclusion, the auto industry desperately needs a year-over-year beat in retail sales to relieve some of the pricing pressure from a growing day-supply problem. Another miss in May would be a detrimental event that could bring a slowdown—or a stop—to auto manufacturing sooner than expected.